ASNA stock took a dive again as Ascena Retail Group (NASDAQ:ASNA), apparel retailer, continues to struggle. Although there was no company-specific bad news that could have led to the drop in stock price, it dipped nonetheless, likely due to industry concerns. ASNA stock has fallen over 18% in the past week.
Industry Concerns
The decline in ASNA stock has to be associated with various factors that might be affecting the industry in general. To begin with, oil prices have increased tremendously, hitting a six-month high with a gallon of gasoline reaching $2.84, up from around $2.61 last month. Although gas prices are expected to rise during warmer months, the sudden swing since Christmas Eve, which has increased prices by 55%, could hinder retail spending since the increase in the cost of gas takes away money meant for discretionary expenses such as apparel.
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Equally, investors of ASNA stock seem to be uneasy about the anticipated earnings season, as analysts have projected worsening results for various retailers that could have been affected by the recent government shutdown in January. Results could also be hampered by delays in tax refunds and smaller refunds as a result of changes in tax laws.
Future Prospects for Ascena Retail Group
With the company facing various challenges, Ascena has struggled to maintain profitability as a result of strong industry competition. Ascena said last month it would consider selling its stake in Maurices to OpCapita for an estimated value of around $300 million. There are also reports that Ascena will sell its other value brand, Dressbarn.
Ascena has said that it will not report Q3 earning until June with its guidance indicating that the company will incur a loss per share of between $0.35 and $0.45 for Q3. Although selling off its brands seems to be a right step, ASNA stock still seems far from rebounding. ASNA is currently trading above $1, putting the stock at risk of delisting by NASDAQ.
Featured image: DepositPhotos @ gpointstudio
